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The Impact of Rate Design and Net Metering on the Bill Savings from Distributed PV for Residential Customers in California

Research or Whitepaper
Net Energy Metering   
Though net metering has played an important role in jump-starting the PV market in the U.S., challenges to net metering policies have emerged in a number of states and contexts, and alternative compensation methods are under consideration. Moreover, one inherent feature of net metering is that the value of the utility bill savings it provides to customers with PV depends heavily on the structure of the underlying retail electricity rate, as well as on the characteristics of the customer and PV system. Consequently, the bill-savings value of net metering – and the impact of moving to alternative compensation mechanisms – can vary substantially from one customer to the next. For these reasons, it is important for policymakers and others that seek to support the development of distributed PV to understand both how the bill savings benefits of PV varies under net metering, and how the bill savings under net metering compares to savings associated with other possible compensation mechanisms.

To advance this understanding, we analyze the bill savings from PV for residential customers of California’s two largest electric utilities, Pacific Gas and Electric (PG&E) and Southern California Edison (SCE). The analysis is based on hourly load data from a sample of 215 residential customers located in the service territories of the two utilities, matched with simulated hourly PV production for the same time period based on data from the nearest of 73 weather stations in the state.